Singapore shares will take their cue from US economic data after the expected passage of a bill to bail out the American financial sector, dealers said. The House of Representatives was expected to vote Friday on an amended bill to buy up to 700 billion US dollars worth of tainted mortgage-related assets at the root of a global financial crisis.
The Senate passed the bill earlier. Approval by the House is also assumed, which puts the focus back on the overall state of the United States economy, Song Seng Wun, regional economist with CIMB-GK Research, said.
"It's not a magic pill," Song said, likening the bailout to a blood transfusion. "But the patient is still very sick." Investors will be watching US labour market data due out later Friday, along with the Institute of Supply Management's report on the key services sector. Song said investors will be hoping the data provide a "positive surprise" to kick-start the local bourse next week, but a poor showing could send the market lower.
Investors will be "sitting on the edge of their seats again," he said. In Singapore, the government next Friday is to issue its advance gross domestic product estimates for the third quarter.
Economists have said Singapore could be entering a technical recession, which is defined as two consecutive quarters of quarter-on-quarter contractions in the GDP, the total value of goods and services produced in a country. On an annualised, quarter-on-quarter basis, Singapore's economy contracted 6.0 percent in the second quarter, official data showed.
Song said he expects another six percent annualised, quarter-on-quarter shrinkage, as well as a year-on-year contraction of a half to one percent for the third quarter. The Monetary Authority of Singapore on Friday is also due to release its twice-yearly policy statement.
In the week ended October 3, the blue chip Straits Times Index closed at 2,297.12, down 114.34 points or 4.74 percent for the week. Average daily volume traded for the week was 1.12 billion shares valued at 1.41 billion Singapore dollars (973.25 million US), compared with 1.06 billion shares worth 1.15 billion dollars the previous week.
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